I've built plenty of computers for $500. If you just put in a bunch of components rather than searching for the best deals of course you won't save much money.
The value saved is often overstated. I've been shopping for a pc and decided to load all the components from a Digital Storm build into a Newegg cart. The difference was about $150. I've built enough pc's so that its no longer fun, and $150 is well worth the price of not having to deal with it. Earlier in the thread someone mentioned building for $500...yeah that isn't gonna happen.
It doesn't sound like you are being a cag about it.
Just quick estimate with very vague (but conservative numbers):
150 video card
Even search of new egg items that are not on sale will find better prices on all those components with specs that are more than enough to blow away console graphics.
Not to mention that you can probably get an old case for free and used hard relatively cheap.
You could easily knock $300 of that price with out even doing any shopping around or waiting for deals.